MercoPress. South Atlantic News Agency

World trade to grow 2.5% this year dragged down by Europe

WTO Director General Pascal Lamy: “the risk more on the downside than the upside”

World trade will grow by a mere 2.5% this year, dragged down by Europe to less than half of the previous 20-year average, the World Trade Organization (WTO) said on Friday. WTO cut its estimate from a 2012 growth forecast of 3.7% in April and also lowered its growth forecast for 2013 to 4.5% from 5.6%.

“I see the risk more on the downside than the upside” WTO Director General Pascal Lamy said at a news conference in Singapore. ”What could be surprising is that you have a volume of trade that is lower than world (economic) growth.“

The WTO figures are based on world economic growth of 2.1% in 2012 and 2.4% in 2013, which it said was a consensus estimate of economic forecasts.

”The main reason for the growth slowdown is of course Europe“ said Lamy, who will step down next year as head of the 157-member group that has so far failed to agree on major reforms of global trade rules.

”We also know US growth is lower than expected, (and) Japan is not in great shape.”

The WTO now expects 1.5% growth in exports from developed economies this year, instead of the previous forecast of 2%. Those from developing countries are seen posting 3.5% growth, down from 5.6% previously.

It sees developed nations more than doubling their export growth to 3.3% next year and developing countries exporting 5.7%.

The WTO said in a statement that its 2013 estimates assumed current policy measures would be enough to avoid a break-up of the Euro and that agreement would be reached to stabilise public finances in the United States and avoid automatic spending cuts and tax increases early next year.